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Business and Economics > Production and Operations Management

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • Retail and Wholesale Trade; e-Commerce x
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Cover IMF Working Papers
The Role of Information in Driving FDI Flows: Host-Country Transparency and Source-Country Specialization
Assaf Razin
,
Mr. Ashoka Mody
, and
Efraim Sadka
We develop a simple information-based model of FDI flows. On the one hand, the abundance of "intangible" capital in specialized industries in the source countries, which presumably generates expertise in screening investment projects in the host countries, enhances FDI flows. On the other hand, host-country corporate-transparency diminishes the value of this expertise, thereby reducing the flow of FDI. Empirical evidence (from a sample of 9 source countries and 13 host countries over the 1980s and 1990s), analyzed in a gravity-equation model, provides support for the theoretical hypotheses. The model also demonstrates that the gains for the host country from FDI (over foreign portfolio investment (FPI)) are reflected in a more efficient size of the stock of domestic capital and its allocation across firms. These gains are shown to depend crucially (and positively) on the degree of competition among FDI investors.
Keywords:
WP; FDI investor; capital stock; Foreign direct investment; intangible capital; transparency; FDI inflow; high-productivity firm; FDI flow; industry specialization; Trade in goods; Stocks; Productivity
Cover IMF Working Papers
Equilibrium in a Non-Interest Open Economy
International Monetary Fund
This paper analyzes an economy in which there are no interest-bearing assets, only equity shares. Equilibrium conditions are derived for the case of a closed economy, an open economy with trade in goods only, and finally one with trade in both goods and equity shares. It is shown that the rate of return to capital equilibrates savings and investment, that the differential between the domestic and foreign rates of return to equity determines the direction of capital flows, and that under a fixed exchange rate system, adjustments induced by exchange rate changes are channeled through the asset accounts.
Keywords:
WP; rate of return